Productivity: the key to the economic lock

Do you want a single, clear, and easy benchmark of the CNMI’s economic situation?

Here it is: Ask a few businessmen if the productivity of local labor is greater now than it was five years ago.

If they say “yes,” then the CNMI is on a virtuous economic path. If, by contrast, they say “no,” then the Commonwealth is kaput.

A few folks who ponder such things in Washington D.C. asked me this question, and it strikes to the heart of a lot of issues. For example, in theory, our access to alien labor allows us to also attract more capital, which, in turn, should increase the productivity of local labor. Nobody ever puts things in those terms, but that’s really the big issue here. It’s all rooted in something known as the Cobb-Douglass production function, which economists spend a lot of time pondering; it’s basically a relationship gig between labor and capital (and the productivity thereof).

The United States is getting more productive (per worker) every year. Ditto Korea, Hong Kong, Singapore, Taiwan, and, well, just about any worthwhile place in the world, with the exception of Japan, which is pretty much hopeless.

And we’re pretty much hopeless too if all we can do is blame Japan’s woes for our woes. Japan’s fall from economic grace provided an opportunity for the CNMI to try to snare market share from Guam’s tourism industry, a point I made clearly when I consulted for the Marianas Visitor’s Authority. How silly of me to think we’d actually try to compete with a competing market…what was I thinking?

So now, U.S. economists who follow such things want to know why the CNMI has a presumably cheaper pool of hotel labor, yet Guam’s industry is more competitive. Hmm. Maybe they’re putting brain food in the drinking water down there, I reckon.

Indeed, the Commonwealth is blowing it big time (as they say in California), and is losing its economic fig leaves one by one (as they say…, well, nobody says that, actually). Leave the garment industry out of the flap, and just concentrate on tourism for a minute, and ask yourself why the CNMI, the closest U.S. flagged destination to Asia’s ripe markets, can’t even fill its hotel rooms. When you answer that question, you’ve pretty much solved the entire riddle. It’s as if the CNMI is trying to push the economic rope since pulling on it takes far too much exertion.

In the meantime, like a manic-depressive soccer mom on Prozac and meth, we’ll see sentiment here bounce from false hopes to very real despair, and back again. Never mind all that gibberish, though. Just ask a businessman about labor productivity, and you’ll have your answer. There’s a productivity boom going on out there in the real world, and if we’re not part of it, this economy isn’t going to improve substantially. Period.

Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. “Ed4Saipan@yahoo.com”